Is state housing for life?
Sunday News reports:
MORE than half of all households in private rental accommodation need state subsidies to pay the rent, says a new report that urges the Government to vest some of its “cold, mouldy and old” Housing New Zealand stock in not-for-profit groups.
It also reveals the Government is moving to abandon the decades-old acceptance that a state house is a “house for life”.
In its report on New Zealand’s social housing system, the Housing Shareholders Advisory Group says Housing New Zealand is developing strategies to provide homes only “for as long as [a] need exists”.
This is a significant shift from the practice of leaving tenants in the same house for years, giving them security of tenure regardless of whether their circumstances change.
This is merely sensible. The provision of state houses should be done to those most in need, and is not a life-time entitlement.
It will never happen of course, but a more sensible policy would be to have the state provide income assistance to tenants based purely on need, and not on who the landlord is.
August 8th, 2010 at 1:05 pm
a more sensible policy would be to have the state provide income assistance to tenants based purely on need, and not on who the landlord is.
Yes… except that it risks becoming a subsidy for private businesses (i.e. private landlords), and all that happens is that rents increase by the amount of the subsidy available.
[DPF: If poor people have more money to spend on accommodation, then yes with supply and demand there may be some impact on the level of rents but it won't be a lot, as they don't represent all the market. Further one could argue increasing welfare benefits across the board will lead to higher rents by the same logic]
August 8th, 2010 at 1:23 pm
Deborah, I’ve seen some remarkably stupid comments here over the last five years or so but yours ranks at the very top. Congratulations.
August 8th, 2010 at 1:29 pm
Deborah come on, the ranting right wingers on here will argue that landlords are owed corporate socialism from the taxpayer.
Want to drop rental prices, easy, just dump the so called housing subsidy, that will drop them.
A few landlords go broke, ah well, big boys games.
Hmm, I wonder if the Nats with their argument that the housing stock is old are setting state housing to be sold off (given away) like in the nineties.
Would the Nats would be stupid enough to toss some eighty year old widow out of her state house ?
August 8th, 2010 at 1:35 pm
Agree DPF. State housing has become a lifetime rort for many, additionally when my wife and I waited almost a year to get a state house in Wellington we were amazed at how many people who had only been in the country a short time, who barely spoke English seemed to get houses at will.
Maybe the rules can be changed as well to let people coming in without jobs, or with very low paying menial jobs who cannot afford to support themselves and look to the NZ Govt to provide for them know that they won’t be supported or welcome until they prove they can stand on their own two feet for their whole existence in NZ!
This would have the added benefit of ensuring that we Kiwi’s in Oz don’t have to listen to any more crap about about NZ’ers crime rates here, much of which seems to be committed by people with good Pacific Island names who have simply used NZ as a back door to Aussie!
August 8th, 2010 at 1:36 pm
“Would the Nats would be stupid enough to toss some eighty year old widow out of her state house?”
Well, some of them would. Rodney probably would as well.
Seriously though, Deborah does have one point, which is that rents probably would be padded.
August 8th, 2010 at 1:39 pm
Deborah is quite right – if rents are subsidised, the rents will rise by the amount of the subsidy. Or more, over time. It will have a very short term effect in people’s out of pocket expenses, but in the long run it is landlords who will benefit most – at the expense of the taxpayer and those who are not subsidised. By then it will be too difficult to undo, making the reliance on social spending even more entrenched.
August 8th, 2010 at 1:41 pm
Reid which is why I would be happy to see the housing subsidy dumped tomorrow.
August 8th, 2010 at 1:51 pm
Some people’s she sense of entitlement is hard to believe. “State housing for life” is a rort and an abuse which should never be tolerated.
August 8th, 2010 at 2:17 pm
The State should not be in housing at all.
“Deborah come on, the ranting right wingers on here will argue that landlords are owed corporate socialism from the taxpayer.”
As opposed to the tenant’s “right” to taxpayer subsidised accommodation for life.
August 8th, 2010 at 2:20 pm
Deborah is right… I’m sure landlords would just love an extra government handout, and that’d certainly shore up their support for National (and maybe some might come back in the form of some thankful donations, you never know!). But so would beneficiaries. And all those WFF recipients. And heck, I’d like one too. But the country can’t afford it so instead of blindly hurling money around we need to take a look at the fundamentals.
The fact that “more than half of all households in private rental accommodation need state subsidies to pay the rent” means rents, in relation to wages, are far too high. That’s because property prices are far too high and because there are too many factors encouraging property investment over investment in the productive sector. A policy to encourage availability of venture capital, for instance, would make – over time – a huge difference to NZ’s economy and its growing unemployment statistics.
August 8th, 2010 at 2:20 pm
“a more sensible policy would be to have the state provide income assistance to tenants based purely on need, and not on who the landlord is.”
Well yes the entitlement would give priority to non taxpayers like refugees and immigrants at the expense of taxpayers struggling to pay their own mortgages.
August 8th, 2010 at 2:37 pm
Murray McCully as Housing Minister in the 1990′s was acutely aware of this disparity and related political issues and it split his thinking down the middle. In the process it drove his departmental bureaucrats crazy as he expected both reform while trying to pander to the politics of the situation. Labour of course is very comfortable with the ‘split’ setup since most of state house tenants are Labour supporters either because they are inherent Labour supporters or if they do have a leaning towards voting National, Labour can (and has) easily scare them out of their wits. As for those on housing supplements, Labour could not really afford to put them in a comparable financial position as state house tenants, but they did not really care.
There was an interesting situation in Westminster City, London some years ago. Council houses there are what state houses are here, and an influential Conservative councillor was able to ‘house’ Conservative supporters in council houses in a marginal ward. The then (apparently compliant) housing director subsequently became CEO of the Shetland Islands Council. The left leaning councillors in due course got wind of his history and could not run him off the Islands quick enough, almost gladly paying him compensation for dismissal without cause.
August 8th, 2010 at 2:48 pm
“MORE than half of all households in private rental accommodation need state subsidies to pay the rent, says a new report that urges the Government to vest some of its “cold, mouldy and old” Housing New Zealand stock in not-for-profit groups.”
This is a ridiculous statement. A state subsidy to pay the rent in private rentals – we’re not talking only HNZ accomdation here – could be of any nature. Anything from the UEB to Working for Families to a tax rebate could be classed as a state subsidy. Who’s to say any of those things doesn’t free up money to pay rent? The next lines then go on to imply any household that accepts a state subsidy is a state house. Good grief. As Rex W says, National are once again starting at the populist slogan end of a problem (is it a problem?), which will return no useful solutions whatsoever. Following populist logic the obvious solution would be to stand outside “state houses” and shout at the occupants to go buy their own house. That’ll do it.
August 8th, 2010 at 4:00 pm
There are two state subsidies on housing at the mo. One is the limit of 25% of income for state house tenants. Which is not a subsidy for all state house tenants as some are paying market rents (based on their income). The other is the accommodation supplement which is based on income, family size and location. So in a sense both are based on need as they are means tested. Whether that level of means testing indcates that the recipients could not pay their rent without the subsidy – who knows.Certainly many families getting one or other subidy will also be getting Working for Families and are likely to be paying negative tax. Neither approach includes undeclared, under the table income and there is plenty of that about. (Noticed in the papers this weekend that IRD is checking painter/decorator income against the paint they buy. Nice.)
August 8th, 2010 at 4:15 pm
Have been a bit bemused about the novelty seen in this report. In the early 1990s the same problems as are being cataloged today had built up as a consequence of housing assistance not always being tied to need and being delivered largely through subsidized state rentals. As a consequence to overcome this problem in 1991 the accommodation supplement became the primary means used to assist with housing affordability, and this was the same whether you rented publicly and privately, or were paying a mortgage.
The current arrangements were introduced in the early 2000s and had income related rents overlaid on top of the 1991 accommodation supplement, so at best the current arrangements whereby Housing Corp tenants are preferentially treated are no more than a decade old.
People get rightly get exercised about people being moved out of properties, but as can be seen here others equally get exercised about people getting the entitlements attached to having a preferential status as a state tenant well after the need has gone. Helping the tenant to buy the house can be a solution, but it does mean that some need to get over their hang ups about sale of state houses.
In terms of Deborah’s comment and some of the follow up comment, private rents are subsidized right now under the accommodation supplement (I can see DPF only attracts well heeled commentators). Where there is a co-payment by the renter (and one that increases proportionately with increasing rent) then the renter will resist rent increases. To the extent that there are “economic rents” available from the supplement it isn’t clear who gets what proportion (the renter or the rentee).
The more interesting question is whether higher rents encourage more investment in rental housing (or for that matter owner occupancy). This leads to the rather comment that Rex Widerstrom makes about there being too much investment in property because rents are too high. I suspect this is a more important issue to worry about, but I think this will lead you back to land availability and the cost of building, and then to RMA and city Councils.
August 8th, 2010 at 4:26 pm
Soon there will be about 10 of us paying to support the rest of the country.
How have decades of free education, free hospitals, free dental care for kids etc etc led us to this situation where we earn drastically less than the Aussies and we have people too ill, stupid, lazy, unskilled etc etc to work and support themselves and their children? Is this where 9 years of Labour and far too much welfare have led us? And we have decades to look forward to of the mentally ill, unhealthy, criminal, feckless children of the solo mums, gang members, long-term unemployed etc.
I think we are totally in the sh-t.
August 8th, 2010 at 4:26 pm
Providing income to the unemployed and solo mothers is making supermarkets raise their prices.
August 8th, 2010 at 4:28 pm
“Labour can (and has) easily scare them [State Housing tenants] out of their wits”
Ever noticed the high correlation between lefty voters and lower educational attainment?
Lefties. Don’t ya just hate em?
August 8th, 2010 at 5:03 pm
“Ever noticed the high correlation between lefty voters and lower educational attainment?”
How does this account for the popularity of the Princes Street branch of the Labour Party whose members are students and graduates of the university situated on that street.
August 8th, 2010 at 5:10 pm
For years I have believed that everybody in the country should be entitled to a state house for life … but before you go off your rockers I will point out the,some would say the fish-hook, in this idea. It should be based on need. Awhile ago there was a classic case where a widow was fighting against being put out of the house she had lived in for decades. It enabled her to put her children and grandchildren up when they wanted to come for a holiday … a very reasonable point if the house was hers … but it is wrong that for much of the year she lives in a house far far too big for her needs. State Housing should have a range of properties to cater for various peoples needs and circumstances from the single person to large multi-children families. So that while they may not live in the same building they can remain in the area where all their friends are, knowledge and interests.
A single person needs really just one room and access to facilities … it may not and probably isn’t what they would like but the taxpayer is providing this … if they want better then they should provide it for themselves, or they and their husband should have during their earlier lives. One way to encourage movement is for the rent to be a percentage of total income, so that as a person’s circumstances improve there is a financial; pressure for them to move out into the private sector. To me this is the meld of socialistic responsible society with the responsible citizen being responsible to their society.
August 8th, 2010 at 5:13 pm
Anyone getting a state house should be required to maintain it. It is not the same as renting off a private landlord. Most state hosues I have seen are dumps that I wouldn’t house my dog in. I had one next door to some flats I owned in Naenae that was mint. Same old couple for thirty years until they went into a home. Within four months the new ‘tenants’ had trashed it. The wallpaper had been ripped off walls, holes kicked and punched in doors, the once immaculate gardens were a jungle. Any state tenant who mistreats a state house in any way should never get another one.
August 8th, 2010 at 5:22 pm
BeaB … I would point out that it is not ‘nine years of Labour’ but rather and more particularly so 9 Labour preceeded by 9 National and six Labour and ? National and three Labour which has turned the basic responsible society of the first Labour Governments into the situation we have today … moan as much as you want but the New Zealander is basically a socialist and there is a definite limit on what any government can do to ‘solve’ the problems if it expects to remain in office. When the sensible kiwi speaks to himself he is happy with the lower wages he gets in NZ because of the advantages of being able to live in the country, however much he may moan about bloddy Labour and f/w NACTs and vice versa depending on the current lead story in the media.
August 8th, 2010 at 5:26 pm
Brian S … that is the problem of the irresponsible citizen who thinks amongst many things that money grows on trees and hasn’t been educated that a citizen has to be responsible to their society in return for receiving the benefits of a responsible society.
August 8th, 2010 at 5:37 pm
“I think we are totally in the sh-t.”
We are, indeed. We have to blame the evil bitch Clark and her successor Key, who seems determined to continue Labour’s ruinous policies.
August 8th, 2010 at 5:41 pm
Whats wrong with tents? Berlesconi thought he would cheer up those Italians affected by stuff.
“Hey, waasser marra, jus preten you is a campin!!”
August 8th, 2010 at 5:45 pm
A more sensible policy would be to have the state provide income assistance to tenants based purely on need….
That is the policy. It would be even more sensible to uphold the policies they already have.
August 8th, 2010 at 5:55 pm
As I’ve pointed out before, the trouble is that landlords’ have invested in existing old dumps for tax advantages, etc. The problem is not too much house building but existing houses being overpriced. Rents for old dumps are probably too high too.
By the way, a landlord will never know a tenant’s exact rent subsidy so the idea that any increase in the accommodation supplement will go direct to the landlord is nonsense!
August 8th, 2010 at 6:13 pm
The housing accomodation allowance is another example of a regressive tax as it actively discourages beneficiaries to go out and work. State House Tenants for example if they were to increase their income then lose their housing allowance. If they are on a waiting list, they get bumped down the list if they become employed.
You’d be better off getting rid of market distorting allowances like this and increasing overall payments to compensate.
August 8th, 2010 at 6:38 pm
Would be good for Aunty Helen to put some of her personal housing stock to good use.
It would show that she does actually care about people, particularly those who are poor and have drug issues.
And like smearing faeces on the walls.
August 8th, 2010 at 8:08 pm
# grumpyoldhori (1,278) Says:
August 8th, 2010 at 1:41 pm
Reid which is why I would be happy to see the housing subsidy dumped tomorrow.
Now please grumpy tell me where I can apply for a subsidy for my houses. I wouldn’t mind at all given that I already subsidize those that rent them quite considerably. I pay their rates i.e. their share of their community uses.
I pay their water bill and I pay their rubbish collection bill, so I reckon that if you were to subsidize me by say $2000 per year then I could get on and raise the rents further to assist with paying the mortgage.
Still what you have to say is typical of ranting illeducated broke socialists isn’t it.
August 8th, 2010 at 8:43 pm
To Deborah: One way out of that is for HNZ to rent the houses off the owners then rent them to tenants. HNZ will pay only a reasonable rate. Owners might even be prepared to take a lower rent than they would otherwise get because they have security of rental payment and guarantee of damage cover. If HNZ gave a contract to rent a house for say 5 years just to know there would be no unlet weeks would be a big incentive to owners.
If a large number of owners rented their properties to HNZ that would be a lot of money saved by the taxpayer not having to build state houses. Normal wear and tear maintenance would be the responsibility of the owners a further saving.
Landlords would get a fair return but no chance of profiteering.
August 8th, 2010 at 10:24 pm
Actually, I’m pretty sure that the university-educated are more likely to be left-wing. Rural areas tend to be conservative, whereas if you go to uni, you get exposed to a wider variety of people and ideas, which pushes you towards liberal (and also libertarian) views. I can’t point you to strong evidence for this, unfortunately.
August 8th, 2010 at 11:16 pm
“How does this account for the popularity of the Princes Street branch of the Labour Party whose members are students and graduates of the university situated on that street”
Yeah but what kind of students are involved. Probably one’s studying arts whose future careers depended upon finding work in the public sector so their enthuasm for leftwing politics with its emphasis on and expansive state sector is more than a little self interested.
August 9th, 2010 at 12:16 am
Bob, HNZ already have that scheme you mention – in addition to the houses they own. Go look on their website.
However, it seems largely a waste of money to me when tenants could just rent directly of the landlord. One thing that private landlords have been pushing for for years is that they can get rent from beneficiaries deducted directly from their benefits – as HNZ get that priviledge.
August 9th, 2010 at 12:27 am
“To Deborah: One way out of that is for HNZ to rent the houses off the owners then rent them to tenants. HNZ will pay only a reasonable rate. Owners might even be prepared to take a lower rent than they would otherwise get because they have security of rental payment and guarantee of damage cover.”
Its not about having security of rental payment and all about covering the cost of capital (interest). Why any sensible landlord would want to buy a house in flatbush and then accept a lower return defies logic. Lower income housing is high yielding to reflect the risk and make up for its limited capital growth potential. This policy simply doesn’t make any sense.
August 9th, 2010 at 8:29 am
“How does this account for the popularity of the Princes Street branch of the Labour Party whose members are students and graduates of the university situated on that street”
Easy – think about a definition of “educational achievement” that is about critical thinking and useful skills.
August 9th, 2010 at 9:08 am
bchapman (478) Says:
August 8th, 2010 at 6:13 pm
“The housing accomodation allowance is another example of a regressive tax as it actively discourages beneficiaries to go out and work. State House Tenants for example if they were to increase their income then lose their housing allowance. If they are on a waiting list, they get bumped down the list if they become employed.”
State house tenants do not qualify for the accommodation supplement. They are however on income related rents with a max of market rent amount. I do agree that both the accom supplement and state house rents formula are regressive. As is Working for Families.
When the accom supplement was brought in decades ago, there was a lot of talk in the media and elsewhere about ;the housing problem’. The accom supplement addressed ‘the income problem’ which in most cases was the real issue. (May have been some areas where there was a genuine shortage of housing regardless of who owned it, but not many.)
No real reason, other than vote catching, to bring in a special regime for state housing.
August 9th, 2010 at 9:48 am
artemisia
My apologies, you are correct re: State House Tenants. When their income increases, they start paying market rents. I have had a number of HNZ tenants say they are discouraged from finding work (unless it pays more than the minimum wage) since a lot of the higher income gets sucked up by the higher rents they qualify for. This is probably more a problem with those living in Auckland and Wellington, but something that could be looked at- effectively it is a negative tax.
August 9th, 2010 at 11:09 am
This is EXACTLY what the Tories in the UK were discussing this week!
August 9th, 2010 at 11:17 am
Anthony so landlords want their money before the poor sods buy food, yep no surprise in that.
August 9th, 2010 at 11:20 am
Viking2 are you saying that like me you are in favour of the so called housing supplement being dropped, why do I have trouble in believing that.
August 9th, 2010 at 11:29 am
Deborah’s comment is halfway right – some of the benefit would go to landlords who would receive an increase in their income after the subsidy – it’s called the Deadweight Loss of a subsidy – you can see an explanation of it here (San Jose University).
(Scroll down, ignore the horrible html coding).
August 9th, 2010 at 12:25 pm
The rents from the tenants of state housing stock does not even pay for the upkeep of those houses. NZ taxpayers would be hugely better off if the government simply gave the houses to the current tenants for free and removed the accomodation supplement or reduced the benefit to compensate.
This would also remove the taxpayer from the house rental market and create a true market model based on private enterprise.
August 9th, 2010 at 2:09 pm
More investment in affordable state housing would take a lot of heat out of the housing bubble, and re-direct investment to the productive sector. That would boost labour productivity, and close the wage gap with Aussie. But who in National Party Cabinet actually gives a fuck about what the serfs are paid right?
August 9th, 2010 at 7:20 pm
FWIW
Those of us with longer memories will recall that a certain R Douglas, H Clark, D Lange et al were responsible for creating the ‘paying market rents’ situation in about 1987, lifting the rental of state houses some 70 percent above what had Ben charged the week before. The term ‘State Houses’ incidentally referred to any house that was owned by a government department – specifically Post Office, Police, and Railways Departments (and any others that could be found). The option was simple. pay the extra or get out.
The effect just happened to coincide with the huge down-sizing that the same well-healed individuals inflicted upon NZ in the name of ‘economic efficiency’ and ‘balancing the books’. There was of course absolutely no connection between the two events. (Cue ‘Tui’ response)
The rationale was, of course ‘User Pays’ with the ‘sweetener’ being that State Tenants (of all shades) were able to purchase the homes they were currently residing in, but the report was that certain individuals in positions to determine the prices of such houses within the departments concerned were also ‘dipping’ which made things worse. Increasing the prices and pocketing the difference!! It was, if you like, a ‘fox in the hen house ‘situation and as a result very few tenants could afford to buy the greatly inflated prices that the ‘insiders’ created.
The state tenants were of course very hard hit but adjusted their belts and starved some more, often bringing in relatives to help pay the rent.
The National government which followed Labour (Jenny Shipley as PM) of course changed nothing – especially as Shipley believed (wrongly) that if the state house tenants were there it was because of their own stupidity and laziness, and did nothing to lower the rents, while dropping the amount of the Unemployment Benefit as an ‘incentive’ to ‘the lazy unemployed ‘ to get work. The fact that there actually want any work actually in existence for anyone to do, did of course make things somewhat more difficult. More belt tightening resulted.
The overall effect of this whole Rogernomics (aka Labour) / National exercise in political ideology was that a situation was created which (New, reformed, Intellectual, not of the working classes) Labour under Clark exploited to the full, and by promising to reduce State House rentals effectively bribed the poor to support them, and by giving the ‘Working for Families’ and other ‘incentives’ continued to do so as long as they remained in power. It was an interesting and effective ‘vote buying’ exercise, which was used very cynically (and increasingly wildly) to obtain the end result – Control, by any means. The end of course is always justifiable – and will even get you to the UN.
As I said, FWIW, just to remind those who might be interested, that it was their Labour Party ‘Hero’s’ (that word in it original form) who actually started the whole State House Rental- increase snowball rolling.
And so doth the ‘Workers Party’ look after ‘The Workers’. (A Peter Sellers response comes to mind . . . )
August 9th, 2010 at 8:09 pm
Komata, I think you are mixing up state houses with other houses govt departments owned and rented to staff for low rents like Police, Teachers, Railway Workers, etc. While those rents may have gone up and the houses sold (our first house a ex Police pool house sold in 1990) state house rents didn’t rise – I mean Helen Clark was Minister of Housing back then and was happy to support Rogernomics as long as state housing wasn’t touched.
Anyway, it made no sense in most cases for government departments to own houses for their workers – houses that had be administered, maintained, etc. It will always be more expensive when the state has to hire contractors to maintain houses rather than private owners who if they don’t want to do maintenance themselves often get friends, students, etc to do a bit of work. I remember even over 10 years ago when the state house next to our Police pool house got painted I think it cost $12k.
August 10th, 2010 at 4:05 pm
Deborah, I’ve seen some remarkably stupid comments here over the last five years or so but yours ranks at the very top. Congratulations.
Adolf once again shows he is complete scum and devoid of the intellectual capacity to argue on the merits of an argument. Just die already.
August 10th, 2010 at 11:24 pm
Deborah’s remark is wrong as I and others have explained earlier – landlords do not know exactly what tenants get and what the tenant gets is only a co-payment so tenants still have an incentive to shop around. So Deborah’s comment is remarkably stupid!